Ørsted, Covestro Partners for World's Largest Offshore Wind Farm

Denmark’s Ørsted has announced the largest-ever corporate offshore wind deal, with German chemical company Covestro signing up to take 100 megawatts of capacity from the upcoming 900-megawatt Borkum Riffgrund 3 project.

December 05, 2019. By Ashish Wagh

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Offshore wind has largely been stuck on the sideline of the corporate renewables market, as demand for onshore wind and solar has surged from corporate giants like Google, Walmart and even oil companies like Shell. That looks set to change.

Denmark’s Ørsted has announced the largest-ever corporate offshore wind deal, with German chemical company Covestro signing up to take 100 megawatts of capacity from the upcoming 900-megawatt Borkum Riffgrund 3 project. Earlier this year Google contracted with Engie for 93 megawatts of offshore wind capacity from the Norther project off Belgium, as part of its massive 1.6-gigawatt global renewables procurement.

Covestro's 10-year, fixed-price corporate power-purchase agreement with Ørsted will start in 2025, the year the wind farm is due for completion in the German North Sea. The price itself was not disclosed. Covestro is a major global producer of polymers, employing nearly 17,000 people.

These days, hardly a week goes by without the announcement of another big corporate renewables deal, as companies move to lock in competitive energy prices while lowering their carbon footprint. So far this week, Amazon has announced three new solar projects totaling 329 megawatts in the U.S. and Spain, while EDF Renewables signed a 15-year PPA with Shell for a 132-megawatt solar project in California. As much as corporations like to say they’re buying green power, cost remains the dominant factor in whether deals get done.

In the U.S., by far the world’s leading corporate renewables market, offshore wind remains in its infancy, and the offtake deals that have been made public with states and utilities remain expensive compared to other options for companies looking for clean power. In Europe, however, offshore wind is no longer an outlier when it comes to cost. Europe’s first no-subsidy offshore wind bids emerged in 2017 in Germany for projects due in 2025; some of that winning capacity will be part of Ørsted’s Borkum Riffgrund 3 project.

Additional no-subsidy bids have followed, and analysts say Europe may soon begin seeing negative bids for offshore wind projects as aggressive developers bet that they will be able to make money in a world of rising wholesale power prices. Meanwhile, the corporate renewables market has begun to flourish in Europe, perhaps making it inevitable that offshore wind developers would get in on the action.

Covestro’s decision to strike the PPA with Ørsted comes as the Frankfurt-listed company is “preparing...for the expected rise in energy prices and CO2 costs,” CEO Markus Steilemann said in a statement. For Ørsted, the deal represents “the first tangible step to secure stable revenues for part of the power generated by Borkum Riffgrund 3, which will be built and operated without subsidies,” said Martin Neubert, CEO of Ørsted’s offshore wind business.

 

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